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The Little Agency That Can't

By Benjamin Weiser and Bill McAllister
Washington Post Staff Writers
Wednesday, February 12 1997; Page A01

Money Machine
The Fund-Raising Frenzy of Campaign '96
A four part series:

Part One: The scandals of the 1996 campaign have led to intense pressure to overhaul the electoral system.

Part Two: Washington may be the epicenter of campaign abuse, but it was places like Pennsylvania's 21st Congressional District where the excesses played out.

Part Three: Congress has given billions in tax breaks to industries and interest groups that contribute heavily to congressional campaigns.

Part Four: The 1996 campaign has revealed the Federal Election Commission to be weak, slow footed, and largely ineffectual.

When the Federal Election Commission finally got around to considering whether Republican Conrad Burns's campaign had broken election laws in his 1988 upset victory in Montana, the former radio broadcaster had nearly completed his first six-year term in the U.S. Senate and was campaigning for reelection.

Undaunted by the delay, the FEC commissioners eventually agreed that tens of thousands of dollars had improperly poured into the race in violation of federal statutes. But there the matter stalled as the commissioners deadlocked along party lines through 15 inconclusive votes on how to proceed.

Fractured by partisan bickering, paralyzed by the commission's own convoluted procedures, the FEC did what the FEC so often does in contentious election matters: It did nothing. Today, nearly a decade after the alleged violations in Montana and deep into Burns's second Senate term, the case remains unresolved.

Call it the federal agency that can't – and probably never could – live up to the hopes and ambitions that attended the FEC at its creation in 1974. Once hailed as the two-fisted enforcer that would protect the body politic from future Watergate scandals and the corrupting scourge of unregulated campaign cash, the commission has proved to be weak, slow-footed and largely ineffectual.

Those deficiencies never seemed more glaring than during the 1996 campaign, when money again seemed to corrupt the electoral process. The FEC remained silent through a wave of revelations about illegal foreign contributions, unprecedented spending by interest groups and other excesses.

Some abuses were uncovered as a result of FEC disclosure statements – the required candidate and party records, available to journalists, campaign watchdogs and the public, of how campaign money comes and goes. Yet the commission's passivity has made it both a symbol of a dysfunctional electoral system and a lightning rod for criticism. Just two weeks ago, the agency told Congress it had not yet begun examining Democratic National Committee records for evidence of donations from foreign nationals – four months after it was asked to do so by the DNC itself.

"It's a joke," former representative Tony Coelho, the Democratic Party strategist who served as House whip, said of the commission. "Nobody takes it seriously." Similarly, Rep. Bob Livingston (R-La.), chairman of the House Appropriations Committee, complained: "Their effectiveness is highly questionable. . . . They've lost their credibility."

Even if the alleged improprieties from campaign '96 are eventually weighed by FEC commissioners, any resolution likely will come only after a glacial process – the kind that has become legendary among politicians and infamous among political reformers.

Moreover, no significant overhaul of campaign finance is likely to succeed without a concomitant invigoration of the FEC, the enforcement agency whose sole purpose is to police the nation's federal elections. And that, officials and independent experts agree, would require reversing more than two decades of history during which all three branches of government seemed to conspire in neutering the commission.

Congress designed an agency that was weak from the beginning, then further enfeebled by congressional attenuation of the FEC's budget and authority – although the commission has managed to spend $320 million in taxpayer money since its inception. Federal courts have repeatedly gutted the agency's enforcement efforts. And a succession of presidents have appointed pliant commissioners who rarely displayed get-tough independence.

Intense partisanship envelops almost every major decision the FEC's six commissioners make. When the commission gathers around its ninth-floor conference table in the old Potomac Electric building on E Street NW, the central issue often is whether the FEC will take action or deadlock 3 to 3 along Democratic and Republican party lines. Without a fourth vote to break the tie, the FEC simply closes the case – regardless of how serious the issues.

Time and again partisan standoffs have prevented the commission from pursuing enforcement actions against major politicians and powerful interest groups, even when the FEC's general counsel recommends going forward. Such cases include Bill Clinton's 1992 campaign; GOPAC, the political action committee once headed by House Speaker Newt Gingrich (R-Ga.); the Christian Coalition; and the organization behind the notorious "Willie Horton" television ads used in the 1988 presidential campaign to portray Democratic nominee Michael S. Dukakis as soft on crime.

"It's become an irrelevant agency," said William C. Oldaker, the FEC's chief lawyer in the late 1970s. "It doesn't strike fear."

`Stalled From the Start'

In the beginning, in the palmy days after Watergate, the FEC was a place full of promise. Talented young lawyers flocked to the agency, lured by the opportunity to fix a corrupt campaign system and cleanse American politics. "We were pretty tough. We were on a mission," recalled Bill Loughrey of Atlanta, a Republican who became the FEC's deputy staff director before leaving in 1981.

Yet for all the optimism and energy, in retrospect it's clear that the FEC's evisceration had begun at birth. The agency, as a Common Cause critique later observed, was "stalled from the start."

"There are those who have described it as designed to fail, simply because Capitol Hill did not want a strong commission – and they still don't, to the best of my knowledge," said Frank P. Reiche, a Republican commissioner from 1979 to 1985. "But having said that, there's enough blame to go around."

Congress had fashioned an agency no individual could control – or lead. The commission's structure, intended to preserve bipartisanship, also guaranteed partisan gridlock and timidity in challenging the political status quo. Unlike most other regulatory agencies, the FEC was deliberately given an even number of seats – traditionally reserved for three Democrats and three Republicans – without another vote to break party-line ties.

Congress also imposed stringent limits on the FEC's powers: The commission can't launch criminal investigations, can't impose penalties on its own, can't get court injunctions before elections to halt illegal activity. Congress subsequently added new shackles, such as banning random campaign audits. The commission may make criminal referrals to the Justice Department, but federal prosecutors press only a handful of high-profile cases each year.

"We're underfunded and overworked," said current FEC Chairman John Warren McGarry, a Democrat. "We have our hands tied behind our backs."

The FEC is further hampered by its own byzantine regulations and structure. For example, the rule requiring a fourth vote for action applies to routine operations, such as issuing subpoenas or hiring senior staff. The rule allows the FEC to argue that its decisions are bipartisan, because at least one commissioner must cross party lines to contribute the fourth vote. "If your position can't attract one vote from the other side, it shouldn't happen," said Commissioner Lee Ann Elliott, a Republican.

But the requirement also tends to paralyze the FEC. "I hate to divide the commission into regulators and deregulators, but I think that's kind of a fundamental difference," said Commissioner Danny Lee McDonald, a Democrat.

That dichotomy plays out in an issue as fundamental as the role of money in politics. Joan D. Aikens, a Republican who has served on the commission since it was created, questions the validity of any federal spending limits, citing Supreme Court decisions that equate campaign spending with free speech. "When you're electing people who control everything we do in our lives, it seems to me you can't spend too much money," Aikens said.

Typically, such views are reflected by Republicans on the FEC when they see a case involving spending limits. The Democrats often take the opposite approach, pushing for strong enforcement. Interest groups have gone to court, at times with the endorsement of the Republican commissioners, challenging the agency on First Amendment grounds, and they have won rulings striking down the FEC's enforcement actions.

Elliott, 69, who formerly headed the American Medical Association's political action committee, acknowledged that she often roots against the commission if her colleagues veer in a direction she considers misguided. "I vote for the issue to go to court when I'm confident we're wrong," Elliott said.

If Republican commissioners have sought to challenge FEC enforcement mandates, Democrats also have sought to use the agency as a political tool. As a member of the House Democratic leadership in the 1980s, Coelho said, he regularly urged Democratic FEC Commissioner McDonald "to level the playing field" when it came to raising "soft money," funds that do not count against spending limits in individual races.

"I was very open about that. No reservation on my part," said Coelho, who said he avoided discussing pending cases and called McDonald "the best strategic appointment we made." McDonald said he did not recall details of his chats with Coelho but appreciated the former House leader speaking well of him.

President Clinton last month snubbed Common Cause's calls for new blood on the commission and renominated McGarry, 74, to a fourth six-year term. The president, argued Common Cause president Ann McBride, "has signaled that it's going to be business as usual at the FEC."

Because many Washington politicians had become accustomed to a partisan FEC, many were stunned when Trevor Potter, a Republican lawyer appointed to the commission in 1991 by President George Bush, began crossing party lines to endorse strong enforcement in several key cases.

This burst of bipartisanship drew plaudits from some traditional FEC critics. But within the agency this new calculus strained the maverick's relationships with several commissioners. According to FEC officials and others, some colleagues resented the attention Potter was getting and feared Congress would react to the new enforcement vigor by cutting the commission's budget or authority.

"I think there were strong and legitimate concerns among some of my colleagues that the commission was becoming too controversial," said Potter, who abruptly resigned in October 1995 to teach at Oxford University. "My view was that there's no point in having a commission if it isn't going to try to do its job and enforce the law."

Negotiated Penalties as Exceptions

Not surprisingly, the FEC's most staunch defenders today are its five sitting commissioners, three Democrats and two Republicans. (Potter's seat remains vacant.) Each commissioner makes $115,700 a year. Each has served at least 10 years on the panel. "I'm very proud of my 22 years," said Aikens, who is 68. "We've done as good as any new agency could."

Using its investigative powers, the FEC over the years has successfully negotiated civil penalties with a number of Democratic and Republican campaigns, corporations and political groups. In 1994, for example, Prudential Securities Inc., one of the nation's biggest brokerage houses, agreed to pay a record $550,000 for improperly using corporate resources to help raise money for nine candidates.

But partisan gridlock and conflicting philosophies within the commission mean that such cases have become exceptions to the rule of inaction on politically sensitive issues. Critics assert that those bagged by the FEC these days tend to be political small fry. "Some poor schnook of a candidate forgets to file one 48-hour report, and like a ton of bricks they're all over the guy," said Benjamin Ginsberg, former counsel to the Republican National Committee.

"The less sophisticated, the neophytes" are more likely to be targeted when the agency reviews disclosure reports, agreed John C. Surina, FEC staff director. "The savvy guy will never be audited," Surina added.

Some candidates, parties and PACs have come to view FEC penalties as less a shameful stain to be avoided and more "a cost of doing business," said Lawrence M. Noble, the agency's general counsel.

Especially in a campaign's home stretch, when eleventh-hour cash infusions can change the election's course, the threat of FEC sanctions may be a feeble deterrent. "The likelihood is that whatever we do resolve, especially if it involves an investigation, will be long after an election," Noble said. "And that is reality."

Consider the case of Christian broadcaster Pat Robertson, a GOP presidential candidate in 1988. By the time FEC auditors uncovered what they alleged to be numerous violations in his campaign and forwarded their findings to FEC lawyers, the campaign was over – the 1992 campaign, that is. Robertson denied the allegations and not until 1996 did FEC lawyers produce their 96-page final report.

When FEC commissioners finally addressed the matter last May – eight years after Robertson's candidacy – they voted to drop the investigation because it was too dated and had consumed too much of the agency's time, commission documents show.

In 1993, the FEC announced an "enforcement prioritization system" intended to make more efficient use of agency resources. To help clear the docket, the commission dropped 137 enforcement cases – some trivial, others more substantive.

Streamlining the workload has not reduced partisanship. For example, FEC auditors scrutinizing Clinton's 1992 presidential bid concluded that the victorious campaign had received $3.4 million in unwarranted federal matching funds. But in considering whether to require what would have been the largest repayment from any candidate for federal office, the commissioners deadlocked 3 to 3 along party lines. The Clinton campaign later agreed to repay $1.5 million.

In 1994, the commission mustered five votes – including Republican members Elliott and Potter – to sue GOPAC, the political action committee once headed by Gingrich. The FEC alleged that GOPAC had violated the law in the late 1980s because it was seeking to influence federal elections without complying with disclosure rules and contribution limits.

Last February, a federal judge dismissed the FEC's suit, saying the commission had not proven that GOPAC's key purpose was to elect specific federal candidates. Rather than appeal, the commission hesitated. Potter had resigned, Elliott changed her mind and the Democrats could not get a fourth vote. The case died.

FEC inaction last summer may have contributed to the massive spending in the 1996 campaign season. The Supreme Court ruled in a Colorado election case last June that political parties can spend unlimited sums in campaigns, as long as the spending remains independent of candidates.

Eager to exploit the ruling, Republicans immediately set up an avowedly independent arm of the National Republican Senatorial Committee (NRSC) to coordinate such expenditures. Hoping in part to slow the GOP, congressional Democrats asked the FEC to clarify the independent spending rules – a notion endorsed by the FEC general counsel. But at the FEC's Aug. 22 meeting, the three Democratic commissioners could not find the elusive fourth vote and no clarification was issued.

Republicans, in particular, continued the aggressive independent spending in 14 Senate races "and we won nine of them," said John Heubusch, then the NRSC's executive director. FEC Commissioner Scott E. Thomas, a Democrat, said the commission's inaction was "very significant" because it gave the "green light to the folks on the Republican Party side . . . and emboldened other groups that were willing to test the concept."

More troubling to critics such as Fred Wertheimer, the former longtime president of Common Cause, was the FEC's little-noticed decision in 1978 that effectively has allowed parties to raise millions in soft money. Those unregulated contributions are supposed to be used for party-building activities but became a major source of cash for candidate promotion, gutting campaign finance laws. "It was," Wertheimer asserted, "their biggest single mistake."

A Classic Commission Standoff

Few cases exemplify the FEC's difficulties better than the 1988 Montana Senate race. After Burns narrowly defeated incumbent Sen. John Melcher (D), Common Cause and a Democratic state legislator both charged that the Republican challenger had won only after an infusion of NRSC funds that exceeded the legal limit – ultimately by about $330,000. That sum represented one-third of all Burns's campaign spending.

After a three-year FEC investigation, five commissioners agreed that the law had been violated. (The sixth commissioner recused himself.) The three Democrats concluded that the NRSC had "engaged in a deliberate operation to evade" federal spending limits and move "massive amounts of prohibited funds" to support Burns's candidacy – allegations denied by the NRSC, Burns's campaign and Montana Republicans. The two Republican commissioners, however, contended that the violations were minor because less than $40,000 in prohibited money had been used.

It was a classic FEC standoff. The commissioners voted again and again, exploring different permutations of how they might proceed. Neither side would compromise. Finally, on the 16th motion, the commission voted 5 to 0 to close the case and do nothing. Infuriated, the complainants asked a federal judge to intervene. That lawsuit prompted tangled legal proceedings that remain unresolved more than eight years after the alleged violations occurred.

"I don't know on reflection if it would have been better to take something over nothing," said McDonald, a Democratic commissioner. "I just must tell you it could have gone on forever."

Debate about how to rectify campaign finance abuses also may go on forever. Following a campaign in which as much as $2.5 billion was spent in the search for votes, Democrats and Republicans have called for legislation that would curb some of the excesses that became apparent in campaign '96. But there has been little agreement in the debate over how – or whether – to build a more relevant FEC.

Reformers such as Wertheimer contend that without tougher enforcement, the major political parties will continue to act as if there is no sheriff overseeing campaign abuses or, worse, as if "the sheriff worked for them."

But to FEC Chairman McGarry, the lack of consensus about the FEC reflects the larger debate about campaign reform a quarter-century after Watergate.

"They did a masterful job, the way Congress structured it," McGarry said of the commission. "It reflects America. There is no consensus in America."

The Federal Election Commission

Its five members have served a total of about 80 years.

REPUBLICANS

Joan D. Aikens, 68
Named to commission: 1975
Before the FEC: Active in Pennsylvania women's GOP groups and a public relations executive.

Lee Ann Elliott, 69
Named to commission: 1981
Before the FEC: Head of the American Medical Association's political action committee

One Republican seat vacant

DEMOCRATS

John Warren McGarry, 74
Named to commission: 1978
Before the FEC: Lawyer, worked for the late Rep. Wayne Hays (D-Ohio), who opposed commission's creation.

Scott E. Thomas, 43
Named to commission: 1986
Before the FEC: Lawyer, former assistant to an FEC commissioner

Danny Lee McDonald, 50
Named to commission: 1981
Before the FEC: Secretary, Tulsa County, Okla., election board

SOURCE: Federal Election Commission

© 1997 The Washington Post Company

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